Photo: Robert Clark

March was a good month to be a renter in Manhattan with overall rents falling and scores of landlords further sweetening the deal by offering incentives.

But Manhattan renters had far less inventory to choose from in March compared to last year, according to a report released today by New York brokerage Douglas Elliman.

Over the last year, the average rental price of a Manhattan apartment slipped 2.9 percent to $4,089 in March. And at the same time, the median price declined 3.2 percent to $3,290.

All median rental price tiers declined year-over-year in March, with the luxury submarket recording the largest decline. The median price of a luxury Manhattan apartment fell 6.2 percent from last year to $8,437 in March. (For the March report, “luxury” was defined as any rentals priced above $6,500 per month.)

“The weakening conditions are all about overbuilding skewed to the upper half of the market,” Jonathan Miller, CEO of the appraisal firm Miller Samuel, and the author of the report, tells BuzzBuzzNews.

There were 20.1 percent fewer Manhattan apartments for rent compared to last year at this time and 26.8 percent fewer new leases. Apartments were on the market an average of 31 days — 24 days fewer than last year.

Yet, despite shrinking inventory, landlord use of incentives remained high in March.

The net share of new leases that contained incentives was 41.7 percent in March, up significantly from 28.4 percent recorded last year. March’s reading was down from 47.6 percent recorded in February 2018 and below the all-time high of 49.3 percent recorded in January 2018.

Incentives are typically a period of free rent used by landlords to keep units occupied, which in turn keeps the vacancy rate down (as seen this month in Manhattan). Some landlords have begun luring new tenants with more high-tech incentives like Netflix subscriptions and Amazon gift cards. The average incentive in March was 1.5 months free rent.

The increased use of incentives is more about falling rents than declining inventory.

“The reason that we are seeing record or near record market share of landlord incentives is because rents are declining — the top level median face rent is declining at a higher rate each month so concessions remain high to slow the decline,” Miller says.

Also, inventory isn’t most reliable way to track the rental market because rental listing inventory can be easily manipulated, according to Miller.

Over the last month, Manhattan’s vacancy rate continued to edge lower, falling from 2.29 percent to 2.05 percent in March — a sign that incentives are filling empty units.

Manhattan net effective rent declined annually for the fourth consecutive month in March, falling 3.8 percent to $3,168 — the largest annual decline in net effective rent tracked in six and a half years. (“Net effective rent” refers to the total amount a tenant will pay after adjusting the asking rent for incentives.)

Click here to read the entire report.

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